Sunday after Market Mayhem 2011


No I don’t think it is over, just it is the first Sunday after the Stock Market Mayhem 2011 (trademark pending), oh joy! What will the coming week bring in the markets? I have no bloody idea, I am still not completely sure but it sure as shooting will not be dull and will give financial hacks like myself plenty of fodder four blunderbuss of financial doom!

If you have been following me on the tweety you will have seen me dredge up some of my favorite OBG posts (oldie but goodie), such as:

  • I still wish I was a runner but my knees and various other parts of my body disagree vehemently with that wish.
  • I guess the question to ask is Canada STILL in a Good Place? I am not sure, but I guess we will tell over the next few weeks.
  • I have taked about Kids’ allowances before, but with this Redux post I revisit one of my favorite topics.
  • One of my favorite Golden Oldies is my post Vultures where I take a line from one of my favorite movies Casablanca and turn it into a warning on your finances.
  • I did do a series on student debt and whether a child’s education should be paid for it, but I have added links to the rest of the series in this post as well.
  • Whenever I go and talk to a bank it inevitably turns into a post on this site and with Banks and Odd Happenings that is no exception.

Enjoy your Sunday!

 

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Anybody seen my Financial Ass?

 

Markets Chewed it Off

I broke one of my rules and looked at my portfolio early Tuesday morning, and all I could think of was the comment from Beverly Hills Cop, when Axel’s boss tells him about how badly he was yelled at by the chief:

You damn right, wise ass! The mayor called the Chief, the Chief called the Deputy Chief, the Deputy Chief just chewed my ass out! You see I don’t have any bit of it left, don’t you?

This is kind of like most of us folks who are in the markets feel right now, but remember as Axel points out “You still got a little ass there”, and it will grow back too. Most of the talking heads are saying we should all just calm down and let the system work, but it is much like looking at a gruesome car accident on the highway. You know you shouldn’t look, you know you shouldn’t slow down, but you end up doing it, because you just want to see it (and then you wish you hadn’t). As a wise person once said to me during a particularly nasty time at work:

This too shall pass, like a jagged, urethra shredding kidney stone, but it will pass.

That is your happy investing expression for the day. Any other useful turn of phrases to help us get through this particularly jagged and shredding time on the markets?

As the day ended I broke the rule again and saw that there was a certain amount of rebound in the market as well, but is it rebound or is it dead fish bounce? Hope it’s a rebound (Canadian Banks seem to be coming back nicely).

Maybe my ass is growing back a bit?

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It’s a Mad House, A MAD HOUSE! (financially again)

Remember these kind of financial bumps in the road, happen fairly often, this is another example. A slight hommage to the original Planet of the Apes (the title is a quote done by Charleton Heston), but it does sum up the financial world (again), it is a Mad House! Seems like only yesterday the entire world financial system dangled over a¬†precipice, this is getting a little repetitive, don’t you think?

Given the financial world is in turmoil (again) I keep getting asked, What do you think folks should do?, and the answer of course is: it depends. Don’t expect a straight answer from me on this one, you folks should decide things for yourself, but I can say what I will be doing: nothing much.

As I am mostly passively invested using Index Funds (that are not ETFs), I couldn’t react quickly enough to sell before the big drop, so I am now going to simply not look too closely, and remember that due to this drop in the market:

  • The lower index fund price means next time there is a dividend buy back (DRIP)I will get more shares of the fund.
  • If I find some money, I will have some bargains that I can then use to re-balance my RRSP and Spousal RRSP accounts.
  • Banging my head on the wall about losing this money is counter-productive, just watch and make sure this isn’t the literal financial apocalypse (in which case there still isn’t much I can do), and wait.

Should you do this? I have no idea, what makes you feel comfortable is what I would advise. If you wish write down a few of the platitudes spouted by the various financial talking heads and maybe make up a bingo card with them for the next financial mad house (possibly turn it into a drinking game).

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What is Your Number?

I watched Wall Street 2: Money Never Sleeps with Michael James last week and while I found the movie kind of sappy, contrite, smarmily written and a little too much like a morality play, it was fun to watch (although if I go to another movie that talks about financial bubbles and mentions fricking the Dutch Tulip Bubble, I am going to scream). There were a few very good catch phrases in the movie, and one of the best was, “What is your number?“.

The question (once explained) is a very good one, it is really, “How much money is enough?“. If someone wandered up to you and offered you an amount of money to last you the rest of your life, or that the amount would make you “happy”, what would it be?

The Villain’s response in the movie is a bit predictable, “MORE!”

Wall Street: Money Never Sleeps (neither does Rust I hear too)

Given we are all not megalomaniacal bankers (the villain in the story is one of them), the question is good for all of us, “What is your number?”.

For me my number would consist of:

How much remains on my mortgage

How much I need until I retire (assume yearly income with a 3% growth per year for inflation) times about 15 years

Any other remaining debt

That would be my number initially, then I would take that number and double it (I might even triple it), because I know that my ability to estimate is always woefully low when it comes to expenses. With that number in my head I realize, that is a BIG STINKING NUMBER, but it is my number.

Do you know your number?

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Doomsday and Money

Evidently yesterday many Italians stayed home from work (in Rome), due to the predictions of a seismologist Rafaele Bendani. The best part of this was that this predication was made in 1915,  so that must make it a legitimate reason to shut down a city.

Then there is Family Radio who claims that Judgement Day will be on May 21st, and Christ will return on that day. Now the world won’t end that day (luckily), but God will destroy the earth in October, after the rapture (I assume). There is also the now famous (as portrayed in the movie 2012) Mayan Calendar story where the world will end on December 21st 2012.

Now, I have spoken about the ability of financial soothsayers to predict the future of stocks, and such, but this is taking the Weatherman theory to the extreme. The Weatherman Theory is that eventually, no matter how outlandish your predictions are you will eventually be right (or you won’t be around to see the results, so in your mind, you must have been right), if you make enough predictions.

What is gained by all of this doom and gloom? Notoriety for one thing (just ask Nostradamus, no wait he is dead), just think how famous you might be if you were the one to predict the end of the world? Come to think of it, I think I could live without that lofty title.

Financial Apocalypse?

This same kind of doom and gloom for the Financial Markets continues with various folks saying that the U.S. will be going back to the Gold Standard, or how the Stock Markets will fail and we will go back to a full barter system (i.e. the Financial Apocalypse). Will this happen? It’s all possible, that is the intricacy of life is that it is not entirely predictable and yes horrible catastrophic things can transpire with little or no warning (ask the folks in Japan about that). If you knew exactly what was going to happen every day of your life, would that be very enjoyable?

Will there be a stock market correction/crash/adjustment/implosion, in the next few years? Undoubtedly, will there be a recovery, most likely, yes. Will it rain tomorrow? Yes, somewhere it will rain on Thursday. As usual, I do not stand by those predictions about the stock market, the gold standard or whether I can get out of debt quickly, I will leave the DOOM and GLOOM predictions to various churches, the government and possibly a few weathermen.

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